UK announces new enforcement unit to clamp down on trade sanctions evasion
Earlier this month, the UK government announced the creation of a new agency to crack down on companies dodging trade sanctions.
The Office of Trade Sanctions Implementation (OTSI) will be responsible for the civil enforcement of trade sanctions, including those that have been imposed on Russia since the war in Ukraine started.
The new unit will be able to issue civil penalties for trade sanctions breaches and refer cases to HM Revenue & Customs (HMRC) for criminal enforcement. Its remit will also involve firms that attempt to circumvent sanctions by “sending products through other countries”.
Anna Bradshaw spoke to Global Trade Review (GTR) and Global Investigations Review about the move.
Anna mentioned that there is a “real disconnect” between the approach to trade and financial sanctions compliance and enforcement.
She explained that HMRC does not usually list any details when announcing penalties and does not publish enforcement guidelines, meaning that firms are often left in the dark in respect of any mitigating or aggravating circumstances in trade sanctions cases, which makes enforcement harder to navigate. However, that reluctance to publish information does not seem to apply when it comes to financial sanctions.
Anna told GTR:
“Unlike OFSI… the HMRC does not disclose your name, nor the circumstances of the breach, so the reputational damage is better contained.”
“It is really difficult to justify a completely different approach for trade sanctions when you compare it to the approach taken to financial sanctions, which for better or worse, is the exact opposite.”
Anna also made the point that the creation of OTSI would have more impact if it became compulsory to report any suspected trade sanctions violations to it.
OTSI will launch in early 2024 and will be part of the Department of Business & Trade.